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December 12, 2013

Survey: Lake Union Partners

Specialty: Developing interesting neighborhood mixed-use multifamily and office projects in core metropolitan areas of Seattle and Portland

Management: Patrick Foley, Joe Ferguson, Scott Roberts, Tyson Feaster

Founded: 2009

Headquarters: Seattle

Projects: Wally at 4111 Stone Way in Seattle, a four-story, 27-unit building (recently sold); 19th & Mercer, a 50-unit apartment and retail building on Capitol Hill; The Rooster, 197 apartments in two buildings near the future Roosevelt Link station in Seattle (finishing spring 2015); The Addy, a five-story, 104-unit mixed-use apartment building in Portland

Photo courtesy of Lake Union Partners [enlarge]
Lake Union Partners last month opened 19th & Mercer, a 50-unit apartment and retail building on Capitol Hill designed by Weinstein A|U.

Patrick Foley responded to questions about the industry and his firm.

Q: What are the biggest trends and issues in your industry locally?

A: Micro-housing, co-working for office users as flexible entrepreneurship becomes more common for GenX, GenY, and even for some baby boomers. Community spaces in multifamily buildings are also important.

Seattle’s recent arrival on the national investment stage and Wall Street’s influence on supply suggest shorter development cycles.

The politics of land use, lack of clarity and coordination amongst various departments within city government, increased entitlement costs and difficulty in predicting reasonable time lines for approvals have become big issues for developers.

The backlash against poorly designed buildings in many of the neighborhoods is justified to an extent when large institutional projects try to do too much with multiple colors and lots of silly facade modulation. Micro-housing is a good solution for affordable housing in the city, but neighborhoods are right in demanding these projects go through design review like other projects are required.

Q: Where will growth come from in the next few years?

A: We are pursuing medium to small creative office buildings and boutique hotels. Adaptive re-use of heritage buildings interests us given our history with these types of buildings. We believe in Capitol Hill, Pike Place Market and Pioneer Square for small and medium-sized creative office buildings with the same type of local interesting retail as in our residential projects. We believe companies will continue to use their office space to attract high caliber employees. We are working with Allegra Properties to help re-purpose the historic Union Stables building on Western Avenue as the future home of Lease Crutcher Lewis and Weinstein A|U, which will have a nice connection to the new waterfront.

Q: Any ideas how Seattle can create more affordable housing?

A: The multifamily tax exemption and incentive zoning provide the right performance structure for developers to create affordable housing by realizing economic benefits. Many states successfully use tax increment financing to fund affordable housing and it’s unfortunate that our state’s constitution doesn’t allow for the same effectiveness of the program.

Q: Do you think modular housing will affect architecture, landscape architecture and urban design locally?

A: It was the next biggest trend 10 years ago and it’s taken off in parts of Western Europe, but we have yet to see it really impact the U.S. outside of the urban core. Its promise of a shorter construction schedule doesn’t provide enough economic benefit to developers. There are feasible options for using pre-fabricated systems, such as pre-framed walls, but what is known as “modular construction” is mainly used as a marketing tool for projects.

Over time our hope is that modular construction becomes more mainstream and makes economic sense. Having said that, I think OneBuild’s projects and process are cool.

Q: What are clients/customers asking for now versus five or 10 years ago?

A: Tenants are increasingly drawn to office and mixed-use buildings that have character that comes from good architecture and appropriate scale, along with a complementary mix of tenants and uses.

Mixed-use did not used to consider shared space the way it does today — and users of these spaces are seeking opportunities for human activity beyond just the lobby and corridors of buildings. In addition, urban professionals and residents are focused on how a building represents their individual style and reinforces their creative expression.

Residents in our buildings tell us that good architecture, well-designed spaces, and interesting local retail that they can use in the building are important to them.

Developers must meet this demand with unique offerings, and not just pretend they do with branding and messaging. Authenticity is ever more important as customers are highly educated and increasingly have more resources to make decisions based on these values.

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